Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
The mantra of U.S. freight brokers is that they're not shippers. Brokers arrange the transportation of their customers' goods. But the freight belongs to somebody else, and brokers never touch the shipments or the equipment used to haul them.
The Food and Drug Administration (FDA) has other ideas. In publishing its long-awaited final rules last Tuesday on the sanitary transportation of human and animal food, the agency did what the brokers asked it not to do: Classify them as shippers.
This means brokers must comply with the regulations as if they were the shippers. The food producers are indemnified once they turn over their shipments to the broker. The producers will instruct the broker on the requirements for the product's safe carriage and handling. However, the responsibility of guaranteeing a clean shipping environment—and the corresponding liability if the ball is dropped during transportation—rests with the broker.
In broad strokes, brokers will be tasked with establishing controls for the transport of food that comes in contact with the environment. (The rule exempts the transport of frozen foods as well as food completely enclosed in containers, unless temperature controls are required.) Brokers must also notify the carrier and cargo loader of the conditions the shipping equipment needs to be in to achieve compliance. For example, brokers must certify in writing that a trailer has been precooled to a proper temperature, although there is nothing that said the freight itself must be precooled.
Failure to comply with the rules could lead to civil and criminal penalties if folks are sickened by food that went bad during transport. It could also leave brokers exposed to significant out-of-pocket costs—not to mention the inherent aggravation of tangling with insurance companies—if food becomes adulterated while in transit.
Chris Burroughs, senior government affairs manager for the trade group Transportation Intermediaries Association (TIA), said that although the industry knew it had a key role to play in the process, it felt the manufacturer should be classified as the shipper because it had the deepest knowledge of the product's characteristics. Despite that, the industry is prepared for the regulations because it already follows many of the practices the FDA outlined, Burroughs said.
Food is a huge and established commodity for brokers, though TIA could not quantify its size.
Brokers will "embrace this, and (will) be prepared to educate our shipper partners and ourselves on how to best comply," said Robert Kemp, president and CEO of DRT Transportation LLC, a broker based in Lebanon, Pa. That doesn't mean Kemp's looking forward to the experience. "This ruling is just another example of the government getting in the middle of the intermediary business, without really fully understanding what we do," he said in an e-mail today.
Implementing the law
The final rules, which implement the Food Safety and Modernization Act signed into law in 2011, represent the FDA's first foray into regulating transportation. For larger companies, the rules take effect one year after their publication date, which is expected to be early to mid-June. Smaller companies, defined as shippers with less than $27.5 million in revenues and carriers with fewer than 500 employees, would get two years from the publication date to comply.
Ironically, the FDA said in January 2013, when it first proposed the regulations, that it had no plans to add more layers to current sanitary food practices. The agency said at the time that its goal was to ensure that the status quo wouldn't trigger unnecessary risks to the food supply chain. In a statement issued when the rules became final, the FDA said it wants to "prevent practices during transportation" that could jeopardize food safety. Robert D. Moseley, an attorney for the law firm Smith Moore Leatherwood LLP, said in a note published Monday on the firm's website that the final rules are not as broad-based as what was first proposed.
There are a host of exemptions. For example, the rules do not apply to Mexican or Canadian firms shipping food through the U.S., as long as the food doesn't enter U.S. distribution. Shippers, carriers, and receivers of milk products that are inspected under a separate program are also exempt. Waivers were also granted to the unloaders of the goods, though the receivers of the product must still comply.
The FDA dropped its requirement for specific monitoring technology to be installed on or in the trailer, leaving it up to the broker and carrier to determine the devices to be used. Brokers will also not be liable for products, such as chocolate and butter, whose characteristics may change during transportation but wouldn't present a hazard if consumed in its altered form.
In two more breaks for brokers, the FDA said one batch of spoiled product would not render the entire load adulterated. The agency added that deviations in temperature between what appears on the bill of lading and what is actually recorded in transit or upon arrival must be "material," and not incidental, for the shipper to be liable.
TIA said in its 2014 comments to the proposed rule that a full load would be considered adulterated even if there was a mere 0.5-percent deviation in temperature levels, and that the broker would be on the hook for the total cost. Currently, the burden of proof falls on the producer and, at worst, the broker would be responsible for a portion of the cost of the damaged goods, according to the group.
The FDA has also left open the possibility that a shipper or carrier can rebut a charge of contamination if it can get a qualified individual to attest that the circumstances surrounding the transportation did not render the freight unsafe. Noting the provision, Moseley advised that it "would be a good time to get a retired FDA inspector on speed dial."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.
After years in the military, service members and their spouses can find the transition to civilian life difficult. For many, a valuable support on that journey is the U.S. Department of Defense (DOD) SkillBridge program. During their final 180 days of service, participants in the program are connected with companies that provide them with civilian work experience and training. There is no cost to those companies while the service member continues receiving military compensation and benefits.
Both sides benefit from the program. “We’re proud to work with SkillBridge to give back to our military veterans for the bravery and sacrifices they’ve made for all of us,” Troy Pederson, director of training and development at LiftOne, a Hyster-Yale dealer and established SkillBridge employer, said in a release. “In the last year, we’ve helped 10 SkillBridge interns transition from military to civilian life, and the value and positive impact of the program can’t be overstated. At LiftOne, we’ve gained so much from the experience and diverse mix of technical and leadership skills of our SkillBridge candidates.”